The anionic cyanine dye Merocyanine 540 (MC540) dissolved in Aerosol-OT (AOT) solutions of heptane and toluene possesses a significantly higher fluorescence quantum yield and excited singlet lifetime than the acetonitrile solutions of the dye. The difference in the photophysical properties observed upon incorporation of the dye into the AOT micelles is attributed to the decrease in the photoisomerization efficiency. The presence of AOT also controls the aggregation and photosensitization behavior of MC540 adsorbed onto TiO2 semiconductor nanoparticles. MC540 adsorbed onto nanostructured TiO2 films from acetonitrile solutions contains both the aggregated and monomeric forms of the sensitizer, while the dye-modified films obtained from AOT/heptane solutions contain mainly the monomeric form of the sensitizer. Significant enhancement in the photocurrent generation efficiency has been achieved in photoelectrochemical cells using the AOT encapsulated dye films. An electroactive polymer (poly(4-vinylpyridine)) film cast on the dye-modified TiO2 electrode has been found to be effective in promoting charge mediation and minimizing dye desorption from the electrode surface. The incident photon-to-photocurrent generation efficiency (IPCE) exhibited by the monomeric form (similar to 40%) is nearly five times greater than the corresponding efficiency of the aggregate form (similar to 8%). The beneficial aspects of incorporating dyes in organized assemblies for the purpose of suppressing nonradiative decay of the excited-state sensitizer and minimizing the aggregation effects on semiconductor surfaces are discussed.